TORONTO, Nov. 19, 2013 /CNW/ - A new white paper by the Chartered Professional Accountants of Canada (CPA Canada) clarifies confusion in the public debate about tax evasion, tax avoidance and corporate income tax and its effect on business.
"Attitudes and expectations are changing, both in Canada and internationally, so it is important they be addressed," says Kevin Dancey, FCPA, FCA president and CEO, CPA Canada. "Not only does the white paper provide greater clarity relating to the issues but it also provides recommendations to help Canada's corporate tax system work as efficiently as possible."
CPA Canada believes enhanced relationships based on more transparency, cooperation and trust among tax authorities, businesses and tax advisors should help strengthen the country's tax system. "We recommend that the federal government consult with the affected parties on the potential benefits that enhanced relationships and increased transparency may offer," says Dancey.
The white paper acknowledges that tax planning, both at home and abroad, is not always black and white. The domestic and international tax systems are highly complex and there is considerable confusion in the public domain over what tax evasion actually means and what is acceptable tax planning.
"Illegal tax evasion is harmful to economies and must be prevented," explains Gabe Hayos, FCPA, FCA, vice-president, taxation, CPA Canada. "However, legal tax planning by businesses should be accepted as a means of reducing costs. Corporations should be expected to make legal use of low tax rates or other tax incentives that countries offer to compete for foreign investment."
The white paper acknowledges that grey areas can emerge. A company's tax planning may be technically legal but a revenue authority could view the action as going against the object and spirit of the law. These situations often require the involvement of the tax courts and policy makers to help resolve the dispute. Both the taxpayer and revenue authority would benefit from avoiding such disputes which can be long and costly.
The Organisation for Economic Co-operation and Development is working on the G20's behalf to develop global solutions to stop tax evasion, increase tax transparency and information sharing, and modernize international tax laws. "Canada and its corporate taxpayers need to be part of the process to ensure that our competitive position is maintained and recommended solutions are addressed from a Canadian perspective," says Hayos.
The white paper also outlines several steps that Canada can take now to improve its tax system. These include:
- Keeping corporate income tax rates low
- Tightening the focus of specific anti-avoidance rules
- Rethinking the corporate income/consumption tax mix
- Using tax policy to help Canadian businesses compete
- Pursuing more international Tax Information Exchange Agreements.
CPA Canada will share its white paper with representatives from government, key tax stakeholders and other national and international associations and organizations.
For more information about CPA Canada's white paper Corporate tax evasion, avoidance and competition: Analyzing the issues and proposing solutions visit www.cpacanada.ca/taxevasion.
About CPA Canada
CPA Canada is the national organization established to support unification of the Canadian accounting profession under the Chartered Professional Accountant (CPA) designation. It was created by the Canadian Institute of Chartered Accountants (CICA) and The Society of Management Accountants of Canada (CMA Canada) to provide services to all CPA, CA, CMA and CGA accounting bodies that have unified or are committed to unification. As part of the unification effort, CPA Canada and the Certified General Accountants Association of Canada (CGA-Canada) are working toward integrating their operations. Unification will enhance the influence, relevance and contribution of the Canadian accounting profession both at home and internationally.
SOURCE CPA Canada